Commodities Corner

Crude oil trades higher following surpirse decline in inventories

Crude oil settled higher as traders were taken by surprise with a Government report showing a decline in US Distillate inventories. Oil prices initially declined as most traders reacted on instinct to the build in crude oil stocks and pushed the market lower. These losses were quickly recouped following a decline in distillate stocks. Most analyst had forecasts for a build in stocks.

Crude Oil finishes higher

Crude Oil at two week low

Crude Oil fell to its lowest level in two weeks as investors were hit by a series of Bearish news stories. Forecasts for warmer weather conditions in both the short and medium term sparked selling. Reports have also emerged that speculative investors have were actively building short positions during Friday's session.

Crude Oil at two week low

Japan Allows US Beef back in.

Early yesterday afternoon the Government of Japan announced that it had lifted the ban on imports of US Beef. This followed the conclusion last Thursday by Japan's Food Safety Commission that US and Japanese beef share similar risk levels.

Although the lifting of the ban is certainly encouraging to a resumption in cattle trade between the US and Japan it is important to see what the announcement really means for trade and what drove the announcement. The following are two articles which provide some interesting facts and figures and show perhaps why the live cattle futures markets reacted so mutely to the announcement.

Japanese Beef commission report misused

Japan reopens market to US Beef

Gold at 24 year high

February Gold closed up 6.7 to $524.5. The push higher has been lead by reports of strong physical demand, However, this is becoming increasingly doubtful, a market report indicated that Indian jeweler demand reportedly fell 20% in November.

February Gold : August - December (source eSignal)

Japan close to allowing US Beef back in!!!

The Japanese Ambassador to the

US

indicated that that

Japan

will reopen its market to US Beef in mid-December. The US Beef export market has largely been shut since December 2003 when ‘mad cow’ disease first hit.

February Live Cattle finished down 0.0.75 or 0.08% at 95.750. Prices were pushed lower despite the Bullish news. The muted reaction is likely to be because many investors had already priced in the news. 

Live Cattle: June -  December (source eSignal)

Cocoa higher: Violence in Ivory Coast

March Cocoa closed up 13 or 0.89% at 1478. Reports of fresh violence in the Ivory Coast, the world’s largest Cocoa producer, failed to excite the market. At this stage reports are of military personal being attacked and overrun. The market did not seem too concerned as the violence did not occur in Cocoa growing regions.

COCOA: January - December 2005 (source eSignal)

Gold closes above $500 an ounce

February Gold closed up 0.9 at 504. The Gold market has rallied strongly in recent trading. The push higher in prices over the year has been lead by a strengthening in demand in the physical market, including; Asia and the Middle East. The boost in  physical demand in turn has sparked the interest of speculative investors which are now holding large long positions.

Gold (Feb Contract): October 2004 - November 2005 (Source eSignal)

Live Cattle closes higher on storm concerns

February Live Cattle closed up 0.37% or 0.35 at 95.2 cents/lbs. The market traded higher as momentum built from last weeks gains. Stronger cash market prices and news of a significant snow storm in northern Kansas and Nebraska also supported the move higher. Severe weather conditions stress Cattle which reduces the quality of beef as well as reducing the flow of beef products to the market.

Live Cattle: July - November (source eSignal)

Gold nears $500 an ounce

December Gold closed up 0.69% or 3.4 at $494.70 an ounce. The market pushed up slightly as investor’s eye the $500 an ounce level. Gold prices have appreciated 14% since the start of the year, the push higher has been supported by economic and geopolitical concerns as well as strong physical demand. The

New York

metals market shuts early on Wednesday and is closed on Thursday and Friday (US times).

December Gold (Source eSignal)

Gold moving towards $500

December Gold closed down 0.7 at 485.6. Prices over the week appreciated sharply following a fresh wave of buying from speculative investors. Buying was across the entire metals complex. Investors were not deterred by a strengthening in the US Dollar which makes metals relatively more expansive for international investors. 

Gold: August - Nov 2005 (source eSignal)